L&G contests transparency is what matters most
Legal & General (L&G) paid out £11.9m in life and critical illness (CI) claims where there was evidence of non-disclosure last year.
According to the provider, it made payments of £4.3m in life claims and £7.6m in CI claims. It said that it thought the figures would be a shock to advisers who might believe that non-disclosure would automatically lead to a claim being declined.
Russell Whitworth, claims and underwriting director at L&G, said the provider was happy to publish life and CI claims statistics if they promoted transparency and improved consumers' confidence in financial services.
He added: "However, there is perhaps a misconception that any non-disclosure results in a claim being declined. This is certainly not the case as we paid out almost £12m last year on cases where there was evidence of non-disclosure. The key is whether the non-disclosure would have been material to the original underwriting decision. Even if it is, we'll consider a proportionate payment wherever possible."
The Association of British Insurers introduced guidelines at the beginning of 2008 that recognised that not all non-disclosure cases deserved a full refusal. This was expected to impact on providers' payouts.
Roger Edward, product director at Bright Grey, said the announcement from L&G was a sound one but did not mean that the industry should rest on its laurels.
He said: "I think it is a good message but the utopia position is one where no one non-discloses - whether it's innocent, accidentally or fraudulently - and therefore gets the full pay-out they're entitled to."
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